nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2013‒07‒20
eight papers chosen by
Karl Petrick
Western New England University

  1. Capital's Pons Asinorum: the Rate of Turnover in Karl Marx's Analysis of Capitalist Valorisation By Passarella, Marco; Baron, Hervé
  2. Inequality and Household Finance during the Consumer Age By Steven Fazzari; Barry Z. Cynamon
  3. Labor market returns to early childhood stimulation : a 20-year followup to an experimental intervention in Jamaica By Gertler, Paul; Heckman, James; Pinto, Rodrigo; Zanolini, Arianna; Vermeerch, Christel; Walker, Susan; Chang-Lopez, Susan; Grantham-McGregor, Sally
  4. From the Bank Panic of 1907 to the Great Depression of 1929 and the Savings and Loan Crisis of the 1980s: Lessons for the future By Trompatzi, Georgia; Metaxas, Theodore
  5. The New CAFE Standards: Are They Enough on Their Own? By McConnell, Virginia
  6. Nudging Energy Efficiency Behavior: The Role of Information Labels By Newell, Richard G.; Siikamäki, Juha
  7. The Social Cost of Carbon Emissions By Duncan Foley; Lance Taylor; Armon Rezai
  8. Mainstream, Orthodoxie und Heterodoxie: Zur Klassifizierung der Wirtschaftswissenschaften By Hirte, Katrin; Thieme, Sebastian

  1. By: Passarella, Marco; Baron, Hervé
    Abstract: This article aims to shed light on the role played by the ‘rate of turnover’ of capital within the Marxian analysis of the working laws of capitalism. Oddly enough, that concept has been neglected by the most part of Karl Marx’s scholars and exegetes, as is demonstrated proved by the small number of scientific works dealing with it. Yet, the rate of turnover plays a crucial role in Marx’s economic thought, since it allows Marx to address the impact of the improvement in finance, transportation and means of communication on the capitalist process of creation (and realization) of surplus-value. As we are going to show, the new manuscripts from the MEGA2 philological edition of Marx’s writings may provide some useful insights. Against this background, the goal of the paper is twofold: first, to bridge the gap in the literature concerning the economic thought of Marx; second, to provide a rigorous (and general) definition of the notion of the ‘rate of turnover’ of capital. This will also allow us: to redefine the concept of the ‘annual rate of profit’; to define a new linked concept – that is, the ‘temporal composition of capital’; and to add a further element in the debate on the counter-tendencies to the law of the tendential fall in the general rate of profit.
    Keywords: Marxian Economics, Turnover of Capital, Financialization
    JEL: B24 B51 E11
    Date: 2013–05–20
  2. By: Steven Fazzari; Barry Z. Cynamon
    Abstract: One might expect that rising US income inequality would reduce demand growth and create a drag on the economy because higher-income groups spend a smaller share of income. But during a quarter century of rising inequality, US growth and employment were reasonably strong, by historical standards, until the Great Recession. This paper analyzes this paradox by disaggregating household spending, income, saving, and debt between the bottom 95 percent and top 5 percent of the income distribution. We find that the top 5 percent did indeed spend a smaller share of income, but demand drag did not occur because the spending share of the bottom 95 percent rose, accompanied by a historic increase in borrowing. The unsustainable rise in household leverage concentrated in the bottom 95 percent ultimately spawned the Great Recession. The demand drag of rising inequality could be one explanation for the stagnant recovery in the recession's aftermath.
    Date: 2013–02–01
  3. By: Gertler, Paul; Heckman, James; Pinto, Rodrigo; Zanolini, Arianna; Vermeerch, Christel; Walker, Susan; Chang-Lopez, Susan; Grantham-McGregor, Sally
    Abstract: This paper finds large effects on the earnings of participants from a randomized intervention that gave psychosocial stimulation to stunted Jamaican toddlers living in poverty. The intervention consisted of one-hour weekly visits from community Jamaican health workers over a 2-year period that taught parenting skills and encouraged mothers to interact and play with their children in ways that would develop their children's cognitive and personality skills. The authors re-interviewed the study participants 20 years after the intervention. Stimulation increased the average earnings of participants by 42 percent. Treatment group earnings caught up to the earnings of a matched non-stunted comparison group. These findings show that psychosocial stimulation early in childhood in disadvantaged settings can have substantial effects on labor market outcomes and reduce later life inequality.
    Keywords: Educational Sciences,Disease Control&Prevention,Health Monitoring&Evaluation,Primary Education,Labor Policies
    Date: 2013–07–01
  4. By: Trompatzi, Georgia; Metaxas, Theodore
    Abstract: This paper goes over three big crises with a global resonance which took place in the American economy during the 20th century. Namely, the Bank Panic of 1907, the Great Depression of 1929 and the Savings and Loan Crisis of the 1980s are examined. The paper lists the major events during the crises in question and probes the causes, consequences and ways through which each crisis was attempted to be encountered. Through this examination, useful lessons to be learned and fatal mistakes to be avoided arise.
    Keywords: Bank Panic, Global Economic Crisis, Great Depression, Savings and Loan Debacle
    JEL: G01
    Date: 2013
  5. By: McConnell, Virginia (Resources for the Future)
    Abstract: New Corporate Average Fuel Economy (CAFE) standards were recently passed in the United States with the twin goals of reducing greenhouse gas emissions and oil use. The new standards represent a dramatic change from recent policy. This paper examines the key features of the new rules, and compares them to previous CAFE standards in terms of flexibility and structure. The importance of consumer preferences and market forces on CAFE outcomes are identified. In the second part of the paper, the perspective of the consumer is explored. Consumer assessments of fuel economy savings with more fuel-efficient vehicles may be biased or incomplete, leading many to argue that there is an “energy efficiency gap” in consumer demand for vehicles. Reasons for such a gap, such as market failures, behavioral responses, and market barriers, are summarized. The implications for policy are discussed, including the role of combining CAFE with other policies.
    Keywords: CAFE, vehicle regulation, energy efficiency, environmental policy
    JEL: Q42 Q48 Q54 Q58
    Date: 2013–05–01
  6. By: Newell, Richard G.; Siikamäki, Juha (Resources for the Future)
    Abstract: We evaluate the effectiveness of energy efficiency labeling in guiding household appliance choice decisions. Using a carefully designed choice experiment with several alternative labeling treatments, we disentangle the relative importance of different types of information and intertemporal behavior (i.e., discounting) in guiding energy efficiency behavior. We find that simple information on the economic value of saving energy was the most important element guiding more cost-efficient investments in appliance energy efficiency, with information on physical energy use and carbon dioxide emissions having additional but lesser importance. The degree to which the current EnergyGuide label guided cost-efficient decisions depends importantly on the discount rate assumed appropriate for the analysis. Using individual discount rates separately elicited in our study, we find that the current EnergyGuide label came very close to guiding cost-efficient decisions, on average. However, using a uniform five percent rate for discounting—which was much lower than the average individual elicited rate—the EnergyGuide label led to choices that result in a one-third undervaluation of energy efficiency. We find that labels that not only nudged people with dispassionate monetary or physical information, but also endorsed a model (with Energy Star) or gave a suggestive grade to a model (as with the EU-style label), had a substantial impact in encouraging the choice of appliances with higher energy efficiency. Our results reinforce the centrality of views on intertemporal choice and discounting, both in terms of understanding individual behavior and in guiding public policy decisions.
    Keywords: energy efficiency behavior, gap, information label, discounting, time preference gap, choice experiment, mixed logit
    JEL: C91 D12 D91 D83 H43 Q41 Q48
    Date: 2013–07–03
  7. By: Duncan Foley; Lance Taylor; Armon Rezai
    Abstract: Determining the social cost of carbon emissions (SCC) is a crucial step in the economic analysis of climate change policy as the US government's recent decision to use a range of estimates of the SCC centered at $77/tC (or, equivalently, $21/tCO2) in cost-benefit analyses of proposed emission-control legislation underlines. This note reviews the welfare economics theory fundamental to the estimation of the SCC in both static and intertemporal contexts, examining the effects of assumptions about the typical agent's pure rate of time preference and elasticity of marginal felicity of consumption, production and mitigation technology, and the magnitude of climate-change damage on estimates of the SCC. We highlight three key conclusions: (i) an estimate of the SCC is conditional on a specific policy scenario, the details of which must be made explicit for the estimate to be meaningful; (ii) the social discount rate relevant to intertemporal allocation decisions also depends on the policy scenario; and (iii) the SCC is uniquely defined only for policy scenarios that lead to an efficient growth path because marginal costs and benefits of emission mitigation diverge on inefficient growth paths. We illustrate these analytical conclusions with simulations of a growth model calibrated to the world economy.
    Date: 2013–03–12
  8. By: Hirte, Katrin; Thieme, Sebastian
    Abstract: [Kritisches Resümee und Ausblick] Der Versuch, die Wirtschaftswissenschaften anhand der schon bestehenden Ausarbeitungen zu klassifizieren, ist mit einer Reihe von Problemen konfrontiert. Die Schwierigkeiten beginnen bereits mit den unterschiedlichen und teils synonymen Begrifflichkeiten, mit denen in der wissenschaftlichen Debatte und der ideengeschichtlichen Literatur die Wirtschaftswissenschaften für gewöhnlich charakterisiert werden. Ergänzt wird das durch Widersprüche, die z. B. dadurch zu Stande kommen, dass einzelne Autoren zwischen 'sozialen' und 'intellektuellen' Klassifizierungskategorien unterscheiden wollen, sich aber beide Kategorien dann wieder deutlich überlagern. In der Summe erklären sich aus diesen konzeptionellen und begrifflichen Schwierigkeiten sowohl die Heterogenität der Klassifizierungsansätze als auch der wissenschaftliche Streit, der um sie entbrennt. Hinzu tritt, dass die Klassifizierungsversuche die Nähe zu den Ideen von Thomas S. Kuhn oder Imre Lakatos suchen, die dafür notwendige ideengeschichtliche Erforschung im Grunde genommen aber erst noch aussteht (siehe Abschnitt 1.4). Ein wesentlicher Mangel ist zudem die Eindimensionalität der Klassifizierungen entweder entlang an Axiomen oder fixiert auf das methodische Vorgehen, ohne zu einer erkenntnistheoretischen und prinzipiell offenen Fundierung vorzudringen. Deshalb sind die bisher vorliegenden Klassifizierungsansätze heterogen und strittig sowie in aller Regel durch eine unbefriedigende Fundierung gekennzeichnet. (...) --
    Date: 2013

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